2 Measurement of cost • Acquisition costs – Legal fees, shipping costs, installation costs – Renovation expenditures • Self-constructed assets – Capitalized interest • Basket Purchases – Allocation to individual assets (Use fair values) • Post-acquisition costs – Ordinary repairs and maintenance (Expense) – Additions and improvements (Capitalize) Problem 7-1A Italian Bread Company purchased land as a factory site for $60,000. An old building on the property was demolished, and construction began on a new building. Costs incurred during the first year are listed below: Demolition of old building $ 8,000 Sale of salvaged materials (1,000) Architect fees (for new building) 15,000 Legal fees (for title investigation of land) 2,000 Property taxes on the land (for the first year) 3 000 3,000 Building construction costs 500,000 Interest costs related to the construction 18,000 Required: Determine the amounts that the company should record in the Land and the Building accounts. Natural Resources • Acquisition cost – Purchased resource – Discovery • Sustainability • Depletion expense